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EU Plans to Scale Back Corporate Sustainability Rules – What It Could Mean for Business

Francesca Ventimiglia•Jun 24, 2025
2 minutes
EU Plans to Scale Back Corporate Sustainability Rules – What It Could Mean for Business

The European Commission’s February Omnibus Proposal represents a significant pivot in EU policy, aimed at reducing the administrative burden on businesses. The proposal could narrow mandatory sustainability reporting and due diligence requirements from approximately 50,000 companies to just 10,000.

In a further development, Parliament rapporteur Jörgen Warborn (EPP) has advocated for even higher size thresholds to protect European competitiveness.

What is Currently on the Table?

The proposed changes would significantly alter the landscape of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD):

  • Narrowed Coverage: Mandatory reporting would only apply to firms with ≥ 1,000 employees (with some proposals suggesting up to 1,750 or even 5,000 for due diligence) and €450 million+ in turnover.
  • Climate Plans: Requirement for mandatory transition roadmaps would be dropped, making these disclosures voluntary.
  • Supply-Chain Due Diligence: Obligations would be limited to direct (Tier 1) suppliers, rather than requiring oversight of the full upstream chain.

Policy Context and Constraints

While the scope is being debated, the EU's broader environmental commitments remain a priority:

  • Ongoing Negotiations: Member States and MEPs are currently negotiating the final scope, thresholds, and implementation timelines.
  • Climate Targets Remain: The EU’s legally binding target to cut emissions by 55% by 2030 (compared to 1990 levels) remains unchanged.
  • Watch Points: Analysts warn of a risk of reduced transparency and "uneven accountability" if rules are watered down too significantly across different jurisdictions.

Strategic Advice for Sustainability Leaders

For organizations navigating these shifts, "less regulation" does not necessarily mean "less pressure."

  1. Don’t equate lighter rules with lower expectations. Investor and customer demands for ESG data are intensifying regardless of legislative thresholds.
  2. Build resilience now. Use this period to streamline your ESG data collection, deepen engagement with key suppliers, and focus on genuine climate innovation.
  3. Stay proactive. Early movers who use this regulatory flexibility to advance authentic sustainability goals will likely emerge as market leaders when the next wave of transparency demands hits.

How is your organization preparing for a potential shift in EU sustainability rules?